Perhaps you’ve worked your entire life to open your own business. One event can ruin everything that you’ve worked for. That’s why securing the future of your business with the right insurance is important. Here’s an overview of the different factors that impact commercial property insurance costs.
Commercial property insurance protects buildings, inventory, equipment, and other items that are important for your business to operate.
Commercial insurance policies have three types of coverage:
- Basic Form protects your property against acts of theft, vandalism, and damage caused by common natural disasters.
- Broad Form protects your property against damage caused by falling objects, collapsing structures, water damage, and ice and snow.
- Special Form protects your property against losses from all types of perils as long as they aren’t excluded by the insurer.
Factors That Determine Commercial Property Insurance Costs
Your insurance provider will assess multiple factors to determine the cost of your commercial property insurance. Every business has unique needs that impact its premium. On average, small businesses pay around $2,000 for property coverage. Businesses that have a higher risk profile will pay higher premiums.
Industry
Businesses that are prone to higher perils pay more for commercial property insurance. If there is a lot of traffic in your building, like in hotels and restaurants, you will have to pay higher premiums because there is an increased risk of an accident. If you own expensive equipment or host potential hazards in your business, you will also pay more for commercial property insurance. Inventory is another important factor, especially for retail outlets, that your insurance provider may assess while determining your premium.
Location
The location of your property impacts your insurance costs. If you’re operating your business in an area prone to natural disasters, your insurance costs may be high. If your property location is such that it is protected from the elements, your insurance costs will be lower. You will also likely pay higher premiums if your business is in an area with a high crime rate.
Construction
The material of construction of your building is also a significant factor. Since wood is flammable, and if your property is made of wood, it will be more expensive to insure. If your building is made with bricks and stone, your insurance costs will be lower.
Traffic
Insurers will look at the number of employees on your property, as well as the daily footfall that your business experiences. Your insurance costs will rise if your property is considered a high-traffic area.
Equipment
Your business equipment impacts your commercial property insurance costs in multiple ways. If your business uses expensive equipment that is risky to operate, you will pay more for property insurance. Operating such equipment increases your chances of being involved in a liability dispute. If your equipment is stolen, it may be a complicated process to replace the items, which increases your level of risk.
Safety Features
You can also lower your commercial insurance premiums by installing enhanced safety features around the property. Sprinkler systems, fire alarms, security cameras, and other measures help keep your property safe and lower your insurance rates.
Potential Exclusions
While you can add full coverage to your commercial property policy, it may still contain possible exclusions. For example, commercial property policies do not cover commercial vehicles. You’ll have to purchase a separate commercial auto policy to cover any damages. If your property is destroyed due to an earthquake, flood, or other natural elements like ice, snow, or sand, commercial property insurance will not cover the repairs. Damage caused by war and terrorist activities and certain types of fires and smoke is generally excluded.
Business Owners Policy
If you’re looking for a comprehensive commercial insurance policy on a budget, it’s recommended that you purchase a Business Owners Policy. A BOP combines liability, property, and business interruption coverage into one policy for less price. If you have more complex needs, you can add a commercial policy package to bundle coverages and lower your premium.
It’s important to remember that every business is different. If you have more questions about your commercial property insurance, contact us today. The team at J. Archer Insurance Group will solve all your issues and help you find the best commercial insurance policy for your business.
